Bitcoin, S&P 500 point to post-midterm gains in U.S. markets

Bitcoin, S&P 500 point to post-midterm gains in U.S. markets
Bitcoin, stocks: post-midterm rally

With the Nov. 3 U.S. midterm elections approaching, historical market patterns suggest both bitcoin and U.S. equities could post solid gains over the following 12 months. The comparison comes as investors weigh whether political gridlock in Washington and bitcoin's separate four-year halving cycle are the stronger driver of past returns.

Highlights

  • Bitcoin has gained an average of 53.7% in the 12 months following the past three U.S. midterm elections, excluding 2010.
  • The S&P 500 has risen an average of 15.17% in the year after U.S. midterm elections since 1950, more than double typical annual gains.
  • CoinDesk analysis suggests bitcoin's post-midterm rallies may align more with its four-year halving cycle than with political events alone.

Historical returns after midterm votes

As reported by CoinDesk, bitcoin has gained an average of 53.7% in the 12 months following the past three U.S. midterm elections, excluding 2010, when the cryptocurrency market remained small and peripheral.

Since bitcoin's launch in 2009, the market has gone through four U.S. midterm cycles. In the three more established post-election periods, the data analyzed by CoinDesk shows a much stronger average advance than the pattern seen in U.S. equities after midterms.

The S&P 500 has risen an average of 15.17% in the year after U.S. midterm elections since 1950. That is more than double the index's average gain in other years, reinforcing the long-held view that midterm cycles tend to favor risk assets once election uncertainty passes.

Political and crypto cycle implications

A Democratic takeover of at least one chamber of Congress could intensify disputes over federal debt, defense spending and President Donald Trump's crypto ties. Even so, markets have largely priced in the prospect of divided government, limiting the chance of a major surprise from the election outcome alone.

For bitcoin, the post-midterm pattern may not be purely political. The article notes that the cryptocurrency's four-year halving cycle could better explain those rallies, suggesting that supply-side dynamics and election timing may be overlapping rather than operating independently.

In our earlier article on rising U.S. Treasury yields and the widening federal deficit, we explained how long-term borrowing costs are squeezing households through higher mortgage rates while also swelling federal interest expenses as annual deficits near $2 trillion. We also noted that with divided government likely after the midterms, political gridlock could limit the chances of a near-term fiscal deal, keeping funding pressures elevated and adding uncertainty for risk assets.

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